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Era of cheap gas is coming to an end warns Russia's Putin

Wednesday, December 24th 2008 - 20:00 UTC
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The era of cheap gas is coming to an end, Russia's Prime Minister Vladimir Putin has told ministers from the world's major gas-exporting countries. Putin said the cost of extracting gas was rising sharply therefore “the era of cheap energy resources, of cheap gas, is of course coming to an end”.

Iran and Libya are among the countries attending the Gas Exporting Countries Forum (GECF) in Moscow. Some observers say the GECF may develop into an Opec-style producers' cartel. As the head of the government of the world's biggest gas exporter, Mr Putin's word carries weight both with producers and consumers, the BBC's James Rodgers in Moscow. But despite Mr Putin's warning, gas prices - which tend to follow oil prices with a delay of a few months - seem likely to fall in the short term, he says. Mr Putin said Russia was ready to set up the GECF headquarters in St Petersburg and give it full diplomatic status. The EU gets 42% of its gas imports from Russia, mostly via pipelines across Ukraine. The Moscow meeting comes amid growing concern that a new contract dispute between Russia's gas giant Gazprom and Ukraine could disrupt gas supplies to Europe this winter. Concerns over energy security mean a formal organisation of gas exporting countries would be deeply unpopular in Europe and the US. It is feared that such an organisation could hold a monopoly on world supply and set prices to suit its own needs. The countries attending are Algeria, Bolivia, Brunei, Egypt, Indonesia, Iran, Libya, Malaysia, Nigeria, Qatar, Russia, Trinidad and Tobago, the United Arab Emirates and Venezuela. Equatorial Guinea and Norway are attending as observers. Russian officials said delegates would agree on a charter that would make the GECF a more formal organisation based in St Petersburg. Issues including possible future cuts in gas production and the effect of lower oil prices are also likely to be on the agenda, our correspondent says. Industry analysts say technical differences between the oil and gas markets - including longer-term contracts for gas exports - make it unlikely for now that gas exporters will set Opec-style quotas. Officials at the meeting stressed they were not trying to set up a price-fixing cartel. Venezuelan Energy Minister Rafael Ramirez said participant countries wanted to build a solid organisation, "which has in its foundation the same principles that gave birth to Opec". But he added: "It's not a cartel. We are defending the interests of our countries; that's all."

Categories: Energy & Oil, International.

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